By Katherine Hamilton

The Children's Place launched a transformation initiative to cut costs as sales continued to fall in the second quarter.

The kid's apparel company on Friday said it was implementing a long-term plan set to bring in more than $40 million in benefits over the next three years. It plans to reduce corporate office costs, optimize its distribution network and right-size merchandise and third-party spending. The savings will go toward launching a new loyalty program to drive retention.

The stock rose 9.5% to $5.90 in after-hours trading Friday.

The transformation is meant to bring its staffing and corporate payroll costs down to an $80 million run rate by 2026, down from $120 million at the start of 2023. The efforts are expected to create $5 million to $10 million in one-time costs.

Children's Place posted a loss of $5.4 million, or 24 cents a share, in the quarter ended in early August, compared with a loss of $32.1 million, or $2.51 a share, a year earlier.

Stripping out certain one-time items, adjusted per-share loss was 15 cents.

Revenue fell 7% to $298 million. The drop in sales was driven by less revenue from brick-and-mortar stores due to lower store count and lower traffic. E-commerce sales also declined due to lower traffic.

Uncertainty about tariffs and macroeconomic factors negatively affected consumer sentiment, leading to pressure on sales and foot traffic, the company said. Same-store sales fell 4.7%. Management said sales were starting to improve in the later part of the quarter as the company adjusted its marketing.

The Secaucus, N.J., company expects tariffs to add $20 million to $25 million in costs during the fiscal year. It anticipates that it will be able to mitigate about 80% of those costs.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

September 05, 2025 16:56 ET (20:56 GMT)

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